TSX up on further signs of U.S. housing rebound

TORONTO — The Toronto stock market was higher Tuesday as a solid earnings report from the biggest U.S. home improvement retailer and a surge in housing starts reinforced sentiment that the American housing sector is rebounding.

The S&P/TSX composite index jumped 103.66 points to 15,442.13. The Canadian dollar lost 0.26 of a cent to 91.6 cents US while the greenback strengthened following data that showed housing starts surged 15.7 per cent in July to an annualized rate of 1.1 million units, the highest level in eight months. That came on the heels of a strong builders sentiment survey released on Monday.

The Dow Jones industrials was ahead 66.73 points to 16,905.47, the Nasdaq was up 9.33 points to 4,517.65 and the S&P 500 index rose 7.22 points to 1,978.96.

“The construction data is very important because of jobs,” said Paul Taylor, chief investment officer, asset allocation at BMO Asset Management.

“The housing-related jobs have not really contributed over the last couple of years (to overall employment growth) and the fact that we’re at 1.1 million housing starts is a strong number. So housing is certainly no longer a headwind, it’s a strong tailwind and that’s an important factor.”

However, he added that it’s unlikely to persuade the Federal Reserve to hike interest rates earlier than generally expected, around mid-2015.

There was further positive news from the housing sector as Home Depot Inc. reported its quarterly profit increased by 14 per cent to $2.05 billion, or $1.52 per share, beating estimates by eight cents. The home-improvement retailer said revenue rose nearly six per cent to $23.81 billion and beat forecasts of $23.57 billion. Its shares jumped 4.9 per cent to $87.67. Canadian rival Rona advanced 17 cents to C$13.20.

Meanwhile, traders awaited possible guidance on the pace of interest rate increases by the Federal Reserve during 2015. The minutes from the latest Fed interest rate meeting will be released Wednesday afternoon. Then, on Friday, Fed chairwoman Janet Yellen delivers the keynote address at the central bank’s annual meeting in Jackson Hole, Wyo.

She is expected to again signal to the market that the central bank is in no rush to hike rates and when it does, the pace will be gradual.

Most TSX sectors were positive, led by a 1.4 per cent rise in the energy sector while September crude declined 69 cents to US$95.72.

The consumer staples sector was up one per cent with shares in Alimentation Couche-Tard ahead 76 cents to $31.65 after Reuters reported the Quebec-based retailer is among those shortlisted to buy a minority stake in China’s Sinopec Sales, the world’s largest fuel retail network. State-run Sinopec Sales is planning on selling a 30 per cent stake by the end of the year. The minority stake is estimated to be valued at US$16 billion.

September copper was a penny lower at US$3.10 a pound and the base metals sector rose 0.2 per cent.

The gold sector slipped 0.2 per cent as December bullion faded $3 to US$1,296.30.